Legal Seminar, Denver, CO

Payment Cards: What’s Not to Like?  • Privacy: But do you value privacy enough to  use another method?  Or lose rewards?   • Cost: someone must pay.  But are merchants  bearing these costs? – Annual fees (but consumers can choose options) – Debit card fees may be lower – but consumers like  credit cards (and rightly so) – Surcharges can be imposed, but they are not  common  (interesting prospects for empirical  research) Payment Cards:  What’s Not to Like • AMEX won anti‐steering case (Ohio v. AMEX, 6/25/18) • Other card‐brands caved and removed provisions from contracts  with merchants.  (But they had less to lose!) • Amex depends on spending, not lending (like Visa, MC) – Invests in better rewards to retain loyalty from cardholders.  – Charges higher fees to merchants to fund those rewards – Merchants wanted: accept Amex but prefer VISA/MC • Held:  No antitrust violation here (affirming 2 nd Circuit) – Card transactions are still growing (no reduced output, increased  prices) – “Negative externality” from friction created by steering – No inherent barrier to competition among other card brands